The construction market continued its record growth in March, adding 32.7% since March 2006, that is the fastest pace of the last 17 years, according to the data revealed by the National Statistics Institute (INS) yesterday. Over the past five months, the construction industry has been breaking record after record in terms of growth pace, due to the better weather than in the same time last year. The overall growth of the first quarter stood at 30.6% compared with 19.3% last year.
Retail sales, however, did much worse than last year for the third month in a row. After an increase of only 14.1% in March compared with March 2006, retail posted only 4.3% growth in the first quarter, compared with 24% in 2006.
INS calculates the increase in real terms for both construction industry and retail, that is an increase than does not include the influence of inflation for the period. Whereas the construction sector accounts for approximately 7-8% of the GDP, retail accounts for 13-14%, which means the slow down in this sector has a greater influence on the economy in its entirety than the better than expected growth of the construction sector.
After all, several signs indicating a slow down of the GDP in the first quarter have emerged in the economy. First of all, the modest retail increase (4.3% in Q1 compared with 24% in 2006) shows a potential slowdown in consumption, which has been the growth driver of the economy over the last three or four years.
At the same time, budget revenues from the value added tax (VAT), which serve to gauge consumption, fell by 26% in the first two months compared with a 23% growth for the entire last year.
In other words, the budget's lower VAT revenues will show directly in the calculation of the GDP, that is in the economic growth.
In addition, the (import-export) trade deficit increased by 83% in the first two months, compared with a 45% increase last year, and almost tripled in the case of the trade with the EU. As with the other indicators, the difference between export and import shows in the GDP calculation.
Foreign investment was down 28% in the first two months, amid a 166% increase in the current account deficit (which gauges the net foreign currency outflows) during the same interval. Foreign investment went up by about 75% last year, while the current account deficit rose by only 45%.
Macroeconomy experts say it is too early to be talking about a slowdown of the economy, and at the same time admit that the economy increased beyond expectations in the first quarter.
"I expect to see a slight negative reaction of the economy to the latest developments. It remains to be seen whether the economic trends in the first two months are confirmed for the entire first quarter," comments Constantin Ciupagea, Premier Tariceanu's state advisor for macroeconomic issues.
The Forecasting Commission, Ion Ghizdeanu is somewhat more optimistic. He anticipates an "about 6%" economic growth for the first quarter. The economy increased by 6.9% in the first quarter of 2006, by 7.7% in the fourth quarter of 2006 and by 7.7% for the entire 2006.
TITL: Generali: bancassurance brings in 14% of revenues
Insurance / Lavinia Marin
Generali Asigurari estimates it will see revenues from bancassurance worth some 57 million RON (16 million euros) this year, given its sales partnerships with eight local banks.
"In 2006, revenues from partnerships with banks accounted for around 14% of the total revenues of Generali Asigurari. The share for 2007 depends largely on the number of partners we have when we complete our negotiations. The final share could account for 16-17% of our total operations," stated Sorin Dragomir, executive manager of Generali Asigurari.
The company currently has partnerships with eight banks in the system: BRD, Soci?t? G?n?rale, HVB Tiriac, Piraeus Bank, ING (through Amsterdam Broker), ABN Amro, Libra Bank, Volksbank and Garanti Bank. "The market share increase may not seem that impressive. However, the perspective is different if we look at the total volume of premiums which we have estimated for 2007, worth around 360 million RON (102 million euros)," added Dragomir.
Eighth in the ranking of local insurers, Generali Asigurari saw a 129% increase in gross underwritten premiums last year, reaching 296 million RON (84 million euros), as well as 6.9 million-euro losses, because of the high value of claims settled for motor insurance.
Generally, the partnerships with banks closed by Generali cover both general insurance and life insurance.
The products are technically the same ones offered by the insurance company through its own sales network or through insurance brokers.
"We are currently in negotiations with a further 5 banks. By the time we start our collaboration, we will become established depending on how much time it takes to find common working methods. Usually, preliminary discussions are not aimed at deciding on insurance products, but focus on collaborating efficiently on a daily basis," explained Dragomir.
He believes the advantages of collaboration come from the precision with which the banks assess all clients, who then become Generali clients as well.
TITL: Sugar production quota reduces Lemarco's growth
Companies / Dana Ciriperu
Lemarco, one of the top three producers of sugar in Romania, last year registered a turnover worth 233 million RON (66.5 million euros), an increase of 43% in RON, according to the information provided by the company.
During the same period, Lemarco's net income increased more than 20 times against 2005 climbing to 19 million RON (5.4 million euros). " The growth in income was registered both for the rising domestic prices of sugar and on the domestic currency's growth against the dollar," stated Dan Popovici, commercial manager with Lemarco.
Amid soaring quotes on the stock exchange, in early 2006 sugar reached prices of 25,000-26,000 ROL per kilogram in Romania, from less than 20,000 ROL in 2005.
Sugar production and distribution account for a total of 97% of the company's turnover, with 3% coming from furniture distribution.
The company owns the sugar plant in Liesti, which over the past 5 years has operated investments worth 4 million euros. The investments have been largely used to boost the company's production capacities, increase the efficiency of sugar extraction and to cut down on energy consumption.
"This year, we expect our turnover to rise, but by a smaller percentage than in the past. In the wake of Romania's EU integration and the distribution of production quotas for each sugar plant in Romania, the Liesti plant was allocated a much smaller quota than its current production capacity," Popovici stated.
According to company data, this year's sugar quota allotted to the plant is around 39,900 tonnes, whereas the Lemarco group last year processed more than 105,000 tonnes of sugar. According to information provided by the company, Lemarco asked for a sugar quota of 70,000 tonnes accounting for around 60% of the 125,000 tonnes produced in 2005.
The company's commercial manager also stated that Lemarco's priorities include boosting the sales of packaged sugar.
Lemarco was created in 1990 as a 100% Romanian-held company operating on the market of furniture production. In 1993, the company began importing raw sugar and began processing it in Romanian plants. By 2000, it had acquired the Liesti sugar plant in Galati county, and the Atlanta Corporation US firm had become one of its shareholder.
Sugar consumption has in recent years amounted to around 560,000 tonnes driving the value of the market above 250 million euros.
Lemarco's priorities include reduction of loose sugar sales
TITL: Elmec increases personnel to sustain development
Companies / Cristiana Groza
Yannis Lagos, a member of the managing board of Elmec, the domestic importer of Nike, has said he wants Elmec's number of employees to increase from 700 at the end of 2006 to 850 by June this year, in order to assist the company's development plans.
"The large increase in personnel is the result of our plans to open a new shopping gallery, at the end of June in the Bucuresti Mall. We'll need 100 staff just to run the gallery. Also, we are hiring people for other outlets we plan to open," says Lagos.
Elmec Romania, the domestic branch of the Greek firm Elmec Sport, is currently operating 36 outlets in Romania, 10 of which were opened in 2006. Brands imported for the Romanian market include Nike, Converse, Killah, Miss Sixty, Docker's, Energie, Polo, Reply and Calvin Klein.
Besides these brands, Elmec Romania also imports fitness equipment produced by TechnoGym and operates the Wellness Club fitness centre in the Plaza Romania mall. According to Lagos, Nike remains the most significant brand for Elmec, with 20 stores exclusively dedicated to its retail.
"Our most important brand is Nike. In the Famous Brands gallery of Plaza Romania, 35% of sales are generated by the Nike and Converse brands (...)", says Lagos, who is also the human capital director with Elmec.
The company's strategic development plan for 2007 includes an increase in the number of mono-brand stores. The number of Nike outlets is expected to increase from 58 to 70 outlets in 2008 (including the Romanian, Bulgarian and Greek markets). The Women Secret brand will increase its number of outlets from 5 to 10, whilst two Famous Brands multi-brand galleries are scheduled to open. At present, the company operates 8 Famous Brands stores in Bucharest and seven outlets outside Bucharest.
"For 2007, the most important project for us is the Famous Brands Gallery in the Bucuresti Mall. It is a completely new concept for the Romanian market and is imported from Greece. The retail area will cover 1,500 square metres and will sell all our products in a space fitted out in line with each brand's specific requirements," added Lagos.
In 2002, the company acquired a 6,000 square metre building in the centre of Bucharest, which is expected to open at the beginning of 2008, as a department store selling footwear, cosmetics and clothing. In late 2008, the company is also due to finalise investments in its 35,000 square metre office building being developed in Otopeni.
The company's most important real estate investment is the development of a 122,000 square metre shopping centre located in Craiova. Investments for the project are valued at 80 million euros, while the shopping centre will be developed in partnership with the real estate developer Aleonsor.
In 2006 Elmec Romania derived a turnover worth 33.9% accounting for around 20% of the Greek group's total revenues, more than double the figure registered in 2005.
TITL: Aviva to invest 35% of clients' money on BSE
Pensions / Mihai Bobocea
Aviva Asigurari de Viata, already a licensed manager of optional private pensions, estimates it will sell the first pensions on May 15, says Corina Cucoli, bancassurance manager with the company.
"We hope to sell the first optional pensions starting May 15 using a field force of around 2,000 marketing agents," stated Corina Cucoli. The company has been recently licensed as a manager of optional private pensions (pillar III) and has received the authorisation for the issue prospectus for its first optional pensions fund.
As soon as it gets green light from the Private Pensions Commission (CSSPP) for the authorisation of the fund, Aviva will start selling optional pensions, first targeting the large companies already part of its portfolio.
Besides its first pensions fund, Aviva is also awaiting CSSPP's consent for its already existing field force: 1,200 full-time marketing agents and another 800 part-time ones. Aviva will manage a single pillar III fund at first, with a moderate risk profile. "We'll invest between 10% and 35% of the pension fund assets in listed shares, with investments to be exclusively operated on the Bucharest Stock Exchange in the first year," says Cucoli. The rest of the money in the fund will be invested in monetary market instruments (between 5% and 20% of assets), bonds (5%-30%) and other placements.
"I believe optional pensions are a corporate business, so we'll mainly sell these products to companies," she specified. Additionally, Aviva is currently seeking "the right legal solutions" to use its partnerships with three banks and a consumer lending firm to sell optional pensions through their banking networks. Aviva currently has bancassurance partnerships with BRD SocGen, BRD Finans (BRD's consumer finance company), ABN Amro and Credit Europe Bank. "As a matter of fact," Cucoli says, "a survey Aviva conducted last year shows Romanians have the highest confidence in banks of all financial institutions".
In terms of compulsory private pensions (pillar II), where sales are to start in August), Cucoli believes it is ambitious targets that matter the most. "If you can't attract a number of customers that may place you among the top five companies on the market, you'd better not enter at all," she says.
Aviva will file a licensing application for pillar II next week at the latest.
"While optional pensions are a corporate business, compulsory ones are an individual business. Moreover, the latter is a volume business, where gaining a high number of customers is essential, especially given the high expenses related to the big investments needed to make pension funds operational," says Cucoli.
"We've already recruited around 10,000 marketing agents for pillar II, of the around 20,000 we'll use," she says. Aviva wants to attract approximately 1 million customers for pillar II.
Aviva surveys show that ...
n On the financial market, Romanians trust banks the most
n Generally, Romanians' appetite for risk in terms of investments is relatively low
n Two thirds of large companies want to offer private pensions to their employees
n 16% of these are multinationals that will give the lead
n A private pension for which contributions are made for 30 years is approximately twice higher than a pension for which contributions are made for 20 years
TITL: Warm weather triples cement sales
Cement producers tripled their cement sales in the first quarter of this year, assisted by the favourable weather conditions allowing construction works to be carried out. "The first quarter of 2007 was exceptional because there was very little bad weather in Romania, but the increase in this quarter does not reflect the trend for the whole year," Phillipe Questiaux, president and general manager of Lafarge Cement, told ZF. The value of cement sales seen by Lafarge on the Romanian market saw a record high increase of 182.7% in the first quarter. This was generated by an increase of 160.7% in the volume of sales, according to the company's quarterly report. In 2006, Lafarge Cement posted an approximately 230 million-euro turnover, up 34% on 2005. German group Heidelberg Cement also tripled its sales in the first quarter, amid the massive demand for cement on the private sector resulting from the warm weather conditions at the start of the year. The Germans posted 280 million-euro turnover for its three divisions of cement, aggregates and concrete. The Swiss group Holcim, another cement producer present on the local market also experienced a 117.3% increase in the volume of domestic cement sales against the same time in 2006, and recorded the biggest increase on any European market. Holcim Romania posted turnover worth 220 million-euros in 2006.
TITL: TCE Logistica sees 20% increase in turnover
TCE Logistica (TCE Logistics), one of the top courier and delivery services in Romania, posted a 2.5 million-euro turnover in the first quarter of this year, up 20% on the same period last year. "EU accession has prompted better financial results for January and February than in the past, when there is usually a sudden decline. This year, January was a good month and the turnover generated in March was higher than in November 2006, the best month of last year," said Sorin Sofian, general manager of TCE Logistica. The company still targets a 35% average growth rate for this year, whilst budgeting a turnover of 11.5 million euros. "The business segment we are operating on in the distribution field, LTL (Less than Truck Load) Just In Time, which makes daily deliveries throughout the country, is continually developing. We also expect the courier market to see positive financial results," said Sofian. Parcel deliveries, through the LTL service account for 60% in the company's turnover, while courier services account for 40% of annual revenues.
TITL: Bathroom furniture brings 5m euros to Arthema
Timisoara-based Arthema, a producer of bathroom furniture, has estimated an approximately 5 million-euro turnover for this year, up 25% on 2006, when the company posted sales worth around 3.75 million euros. "The positive trend in this year's turnover is largely due to the development of the domestic bathroom furniture market following heavy investments in the construction industry. We have closed contracts for the manufacturing and sale of bathroom furniture with various companies in Italy, Germany and Hungary. Also, this year we want to expand our client portfolio for our exported goods," Csilla Pfeifer, marketing & sales manager with Arthema, told ZF Transilvania. In total, exports account for 20% of the turnover of the Timisoara-based company. "Our business started tentatively, since bathroom furniture was not seen as an essential asset in early 1998, but attitudes and tastes change and the market has maintained an upward trend," says Csilla Pfeifer.
TITL: Mall in Valcea sold for 42m euros
The Portuguese company Sonae Sierra, which owns over 40 shopping centres worldwide, has entered the local market through a 42 million-euro transaction, by taking over the River Plaza shopping centre in Ramnicu-Valcea. The shareholders of Setler Mina, the previous owners of River Plaza, are Viorel Popescu, former deputy-prefect of Valcea county, Ghiulsen Popescu, Denise Bojan and Felix Bogdan Bojan, with equal stakes of 25%. They could not be contacted to provide any information on the transaction by the time this issue was ready for print. "River Plaza is the company's 44th shopping centre and is part of the company's long term expansion plan. With this deal, we are penetrating the Romanian market through an already operational mall," stated Alvaro Portela, CEO of Sonae Sierra. River Plaza has an area of over 12,000 square metres, with around 90 stores including a SPAR supermarket, an Altex store, the clothing and footwear chains Leonardo, Kenvelo, Puma, as well as the fast food outlets Pizza Hut and KFC.
TITL: CFR Calatori: 73% higher revenues in 2006
This year, CFR Calatori (CFR - The National Company for Railway Transportation) will invest 174 million RON (around 50 million euros) in acquiring coaches and in modernising its locomotives, according to the Official Gazette. In 2006, the company saw revenues 73% higher than in 2005. The company intends to acquire 189 coaches for approximately 34 million euros (119.3 million RON), in order to increase the coach fleet and replace old coaches. CFR Calatori will also invest over 10 million euros (36 million RON) in the modernisation of locomotives and another 5 million euros (17.7 million RON) in electric trains. According to the Official Gazette, these investments will be funded by the state budget. CFR Calatori will operate a maximum of 1,678 trains, with more than 80% running as slow trains. There will be 44 inter-city trains, 170 high-speed trains and 69 express trains, as well as 14 seasonal trains. By the time this issue was ready for print, company representatives had not provided further information on investments for 2007. Last year, CRF Calatori turned a profit, after seeing losses of 85 million euros (309 million RON) in 2005.
TITL: Vodafone Romania brings ex-Procter & Gamble executive on board
Mobile telephone operator Vodafone Romania has announced the appointment of Paul Markovits as Senior Director of Brand and Marketing Communications, as from April 1, 2007. Markovits, who previously worked for Procter & Gamble, has taken over the position formerly held by Stephanie Jackson, who is currently Senior Director of Online Services at Vodafone Romania. Paul Markovits, 39, is Romanian-born and has a 15-year international experience in marketing and market research. He started his career in the field of political marketing in 1991 in Romania. According to data provided by Vodafone, Markovits has worked in the field of fast moving consumer goods for the last 12 years. Since 1995, Markovits has held several leading positions within Procter & Gamble, playing a key role in the development and evolution of the company's brands. "Before joining Vodafone Romania, Paul Markovits was the Senior Brand Manager, Laundry Category Central Europe South (CES), where he managed the brand revitalisation strategy within the majority of the detergent portfolios of CES (...)," Vodafone Romania representatives added.
TITL: Curiero wants to cover 80% of the rural market
Curiero, one of the leading players on the local courier market, has budgeted a 5.6 million-euro business from postal services this year, 60% more than last year. Expansion on the rural market will also contribute to reaching the business budgeted for the postal segment. At present, Curiero's coverage of rural areas stands at 60%, which the company wants to increase to 80%. In order to sustain its expansion plans; the company has started to supplement its delivery teams with 3,500 new postal couriers. "As postal deliveries in rural areas will expand, we expect to see our portfolio of clients grow," said Bogdan Carcu, Curiero's president. On the postal services segment, Curiero has seen one of the biggest increases recently. Last year, Curiero's postal service business tripled reaching 3.5 million euros. At the moment, the company is in direct competition with the Romanian Post Office, which currently dominates the rural market.
Pentru alte știri, analize, articole și informații din business în timp real urmărește Ziarul Financiar pe WhatsApp Channels
